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Key Performance Indicators, Organizations Success Factors are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. They will differ depending on the organization.
Whatever Key Performance Indicators are selected, they must reflect the organization’s goals, they must be key to its success, and they must be quantifiable (measurable). Key Performance Indicators usually are long-term considerations.
The definition of what they are and how they are measured do not change often. The goals for a particular Key Performance Indicator may change as the organization’s goals change, or as it gets closer to achieving a goal.
The KPI can therefore be thought of as a measurement that tells that management the precise state of operations at any given point of time.
There are 4 basic components to any KPI.
It is important that these 4 parameters are carefully defined keeping in mind the strategic, operational and technical capabilities. Measuring the wrong KPI or measuring the right KPI in the wrong manner can cause more harm than good to the organization that is measuring it.
Many things are measurable. That does not make them key to the organization’s success.
In selecting Key Performance Indicators, it is critical to limit them to those factors that are essential to the organization reaching its goals. It is also important to keep the number of Key Performance Indicators small just to keep everyone’s attention focused on achieving the same KPIs.
You use Key Performance Indicators as a performance management tool, but also as a carrot. KPIs give everyone in the organization a clear picture of what is important, of what they need to make happen. You use that to manage performance. You make sure that everything the people in your organization do to focus on meeting or exceeding those Key Performance Indicators.
You also use the KPIs as a carrot. Post the KPIs everywhere: in the lunch room, on the walls of every conference room, on the company intranet, even on the company web site for some of them. Show what the target for each KPI is and show the progress toward that target for each of them. People will be motivated to reach those KPI targets.
You can’t manage what you don’t measure. It is an old management adage that is accurate today. Unless you measure something, you don’t know if it is getting better or worse. You can’t manage for improvement if you don’t measure to see what is getting better and what isn’t.
Measure those activities or results that are important to successfully that achieve your organization’s goals Key Performance Indicators.
It is important that you communicate your metrics both up and down the organization. Boss wants to know what’s going on, but your employees need to know also. They are not motivated to improve unless they know how they are doing. In addition, most of the suggestions on how to improve will come from them.
Review your metrics and use them to guide your decisions. With your metrics in place, you can tell which strategies are working and which aren’t. If you make a change, you use the metrics to tell you, whether the change improved things or not. When the metrics show improvement, share that success with everyone. And don’t forget to reward the people, who were responsible for the success.
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